Montage Resources : Form8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 12, 2019

Montage Resources Corporation

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-36511	46-4812998
(State or Other Jurisdiction	(IRS Employer
of Incorporation)	(Commission File Number)	Identification No.)
122 West John Carpenter Freeway, Suite 300
75039
(Address of Principal Executive Offices)	(Zip Code)

Irving, Texas

Registrant's Telephone Number, Including Area Code: [phone]

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

• ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

• ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

• ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

• ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Item 2.02

Results of Operations and Financial Condition.

On March 12, 2019, Montage Resources Corporation (the "Company") issued a press release, a copy of which is attached hereto as Exhibit 99.1, announcing its financial and operational results for the fourth quarter 2018 and the year ended December 31, 2018 and first quarter and full year 2019 guidance.

Item 7.01

Regulation FD Disclosure.

The information in this Current Report, including Exhibit 99.1, is being furnished pursuant to Items 2.02 and 7.01 of Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act unless specifically identified therein as being incorporated therein by reference.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

Exhibit NumberDescription

99.1

Press Release, dated March 12, 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MONTAGE RESOURCES CORPORATION

Date: March 12, 2019

By:Name:Title:

/s/ Paul M. JohnstonPaul M. Johnston

Senior Vice President, Corporate Secretary and General Counsel

Exhibit 99.1

Montage Resources Corporation Announces Fourth Quarter and Full Year 2018 Operational and Financial Results

IRVING, TX- March 12, 2019- (BUSINESS WIRE) - Montage Resources Corporation (NYSE:MR) (the "Company" or "Montage Resources") today announced its fourth quarter 2018 and full year 2018 financial and operational results.

Fourth Quarter 2018 Highlights:

• • Average net daily production was 404.5 MMcfe per day, consisting of 72% natural gas and 28% liquids.

• • Realized an average natural gas price, before the impact of cash settled derivatives and firm transportation expenses, of $3.59 per Mcf, a $0.05 per Mcf discount to the average monthly NYMEX settled natural gas price during the quarter.

• • Realized an average oil price, before the impact of cash settled derivatives, of $53.10 per barrel, a $6.87 per barrel discount to the average WTI oil price during the quarter.

• • Realized an average natural gas liquids ("NGL") price, before the impact of cash settled derivatives, of $22.40 per barrel, or approximately 37% of the average WTI oil price during the quarter.

• • Per unit cash production costs (including lease operating, transportation, gathering and compression, production and ad valorem taxes) were $1.34 per Mcfe, including $0.40 per Mcfe in firm transportation expenses.

• • Net income for the fourth quarter of 2018 was $36.5 million; Adjusted net income 1 for the fourth quarter of 2018 was $23.6 million; and Adjusted EBITDAX 1 for the fourth quarter of 2018 was $80.7 million.

• • The Company commenced drilling 9 gross (5.7 net) operated wells, commenced completions of 6 gross (3.1 net) operated wells and turned to sales 3 gross (0.8 net) operated Utica Shale wells.

Full Year 2018 Highlights

• • Average net daily production was 343.2 MMcfe per day, consisting of 72% natural gas and 28% liquids.

• • Realized an average natural gas price, before the impact of cash settled derivatives and firm transportation expenses, of $3.05 per Mcf, a $0.04 per Mcf discount to the average monthly NYMEX settled natural gas price during the year.

• • Realized an average oil price, before the impact of cash settled derivatives, of $58.12 per barrel, a $7.11 per barrel discount to the average WTI oil price during the year.

• • Realized an average NGL price, before the impact of cash settled derivatives, of $24.59 per barrel, or approximately 38% of the average WTI oil price during the year.

• • Per unit cash production costs (including lease operating, transportation, gathering and compression, production and ad valorem taxes) were $1.41 per Mcfe, including $0.39 per Mcfe in firm transportation expenses.

• • Net income for the year was $18.8 million; Adjusted net income 1 for the year was $47.4 million; and Adjusted EBITDAX 1 for the year was $261.6 million.

• • Capital expenditures were $250.0 million, including $223.7 million for drilling and completions, $13.7 million for midstream expenditures, $11.8 million for land-related expenditures, and $0.8 million for corporate-related expenditures.

• • Proved reserves grew 28% over the previous year to approximately 1.86 Tcfe at SEC pricing.

Non-GAAP measure. See reconciliation for details

John Reinhart, President and CEO, commented on the Company's fourth quarter and full year 2018 results, "The fourth quarter's results represent yet another solid performance by the team with the continued focus on execution and efficiency generating cash flows above expectations, continued improvement in production and operating expenses along with strong well performance in all of our project

areas. This level of execution and performance helps to potentially accelerate our goals related to cash flow generation while maintaining balance sheet strength.

For the fourth quarter of 2018, the Company was able to achieve record revenue of $171.2 million, a 64% increase over the fourth quarter of 2017, while also posting a 51% increase in adjusted EBITDAX 1 over the fourth quarter of 2017, which came in at a new Company record of $80.7 million. From a capital spending perspective, the Company illustrated its focus on capital discipline with the roughly 20% reduction in year over year spend and it managed its capital expenditure plan consistent with guidance that was previously provided, ending the year on the target of approximately $250 million. These achievements highlight the strength of the portfolio of assets, the demonstration of the business model to generate positive free cash flow and the ability to drive value for shareholders.

The industry is clearly faced with a new set of operational and financial expectations and as we move through 2019 we will execute on the plan we have created that mirrors our five strategic priorities and commitment to generating organic free cash flow, while still moderately growing our production base. Decreasing our cycle times while continuing to build scale will allow the Company to enhance its operating margins, lower its cost of capital, be well positioned in terms of base production and significantly improve its cost structure. We are looking forward to the continued integration of the teams and the potential opportunities this business model can provide."

1

Non-GAAP measure. See reconciliation for details

Operational Discussion

The Company's production for the three and twelve months ended December 31, 2018 and 2017 is set forth in the following table:

Three Months Ended

December 31,

Year Ended December 31,

2018	2017	2018	2017
Production:
Natural gas (MMcf)	26,657.3	21,178.4	89,965.7	87,404.2
NGLs (Mbbls)	1,010.5	711.0	3,503.1	2,713.7
Oil (Mbbls)	748.6	539.2	2,378.0	1,622.4
Total (MMcfe)	37,211.9	28,679.7	125,252.3	113,420.8
Average daily production volume:
Natural gas (Mcf/d)	289,753	230,201	246,481	239,464
NGLs (Bbls/d)	10,984	7,728	9,598	7,435
Oil (Bbls/d)	8,137	5,861	6,515	4,445
Total (MMcfe/d)	404.5	311.7	343.2	310.7
Financial Discussion

Revenue for the three months ended December 31, 2018 totaled $171.2 million, compared to $104.1 million for the three months ended December 31, 2017. Adjusted Revenue 2 , which includes the impact of cash settled derivatives and excludes brokered natural gas and marketing revenue, totaled $138.7 million for the three months ended December 31, 2018 compared to $105.8 million for the three months ended December 31, 2017. Net Income (Loss) for the three months ended December 31, 2018 was $36.5 million, or $1.81 per share 3 , compared to ($13.1) million, or $(0.75) per share 3 , for the three months ended December 31, 2017. Adjusted Net Income 2 for the three months ended December 31, 2018 was $23.6 million, or $1.17 per share 3 , compared to $5.2 million, or $0.30 per share 3 , for the three months ended December 31, 2017. Adjusted EBITDAX 2 was $80.7 million for the three months ended December 31, 2018 compared to $53.5 million for the three months ended December 31, 2017.

Revenue for the year ended December 31, 2018 totaled $515.1 million, compared to $383.7 million for the year ended December 31, 2017. Adjusted Revenue 2 , which includes the impact of cash settled derivatives and excludes brokered natural gas and marketing revenue, totaled $471.6 million for the year ended December 31, 2018 compared to $378.0 million for the year ended December 31, 2017. Net Income for the year ended December 31, 2018 was $18.8 million, or $0.94 per share 3 compared to a Net Income of $8.5 million or $0.49 per share 3 for the year ended December 31, 2017. Adjusted Net Income 2 for the year ended December 31, 2018 was $47.4 million, or $2.37 per share 3 , compared to an Adjusted Net Income $1.5 million, or $0.09 per share 3 for the year ended December 31, 2017. Adjusted EBITDAX 2 was $261.6 million for the year ended December 31, 2018 compared to $189.1 million for the year ended December 31, 2017.

Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted EBITDAX are non-GAAP financial measures. Tables reconciling Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted EBITDAX to the most directly comparable GAAP measures can be found at the end of the financial statements included in this press release.